Satisfied investors: Modelling customer satisfactions’ influence on re-investing

Scientific Essay 2011 13 Pages

Business economics - Marketing, Corporate Communication, CRM, Market Research, Social Media


Table of Contents

1. Introduction: Modelling behaviour

2. Modelling Consumer Behavior
2.1 Consumer’s choice as planned behaviour
2.2 The Environment of consumer’s choice

3. Customer satisfaction

4. Summary

5. References

1. Introduction: Modelling behaviour

Literature has amassed a considerable number of models trying to explain behaviour. Behavioural models stressing learning and the importance of stimulus-response patterns[1] exist besides models favouring psychological variables like personality and attitudes when it comes to the explanation of behaviour.[2] Especially personality traits gained some prominence in explaining behaviour.[3] Other models highlight situational factors and their influence on rational decision making[4] while a final set of models is concerned with individual’s motives and other variables inherent to actors and not visible to the outside world.[5]

Most economic models assume actors to be rational and furthermore assume that – given particular circumstances or situational variables only one course of action is feasible or rational.[6] Restrictions to this model have been made by authors that highlight individual decisions’ dependency on the way the respective individuals see reality, i.e. the way they frame their decision problem.[7] For example, an economist of Keynesian[8] origin will come-up with completely different solutions when he addresses the problem of general demand as by contrast will a libertarian economist raised in the heredity of F. A. Hayek’s[9] teachings. Thus, subjective rationality depends on circumstances (and preferences) and accordingly, it becomes interesting to look at the circumstances surrounding and influencing individual decision-making. Icek Ajzen[10] and Martin Fishbein[11] have done so and suggested a model for explaining individual behaviour based on a number of variables which will be elaborated in the course of this paper. Furthermore, Engel, Blackwell and Miniard[12] proposed an elaborate model designed to explain customer’s decision making. This model will also be discussed in the remainder of this paper the aim of which is to provide a model capable of explaining investors decisions and the place “customer satisfaction” can take within such a model. To do so, the next chapter will elaborate the two models designed to explain individual behaviour mentioned so far. This done, the following chapter will look into the properties of customer satisfaction and use the identified properties to fit it into the theoretical model elaborated in the previous chapter. The paper ends with a summary and a short discussion of the way the developed model can be used in research.

2. Modelling Consumer Behavior

To model consumer behaviour is to develop a decision model, a model capable of providing a frame capable to explain consumer choice under certain circumstances. In more technical terms, a reliable consumer model must consist of a set of statements that constitute a behavioural law and it must consist of a set of antecedents conditions that allow to derive concrete applications of the behavioural law. The law, used to explain actors’ behaviour determines that actors act rational and that of a given set of alternatives they always choose the one alternatives that has the best cost-benefit-ratio and the highest probability to turn-out. This is the law, economics is build upon.[13] It is the rational-actor model. However, some restrictions are imposed on the model because actors are not expected to base their decisions on omniscient knowledge, rather they are expected to choose rationally from a set of opportunities based on information available to them.[14] Furthermore, actors are expected to determine their choice with reference to their preference and in doing so to narrow down the opportunity space (an actor with vegetarian preferences will hardly find himself seated in a restaurant famous for its meat dishes).[15] Finally, actors use heuristics and have biases that further narrow down opportunity spaces.[16] Heuristics serve as a shortcut that allows for “economies in thinking”, while biases are rather unconsciously affecting the set of alternatives considered by individuals. Two models modelling consumer behaviour and commensurable to these premises are considered in this chapter: The theory of planned behaviour by Icek Ajzen,[17] which is a further development of the theory of reasoned behaviour developed by Ajzen and Fishbein[18] and the model of consumer decision making suggested by Engel, Blackwell and Miniard.[19] Both models rely on the rational actor model, both models, however, fill the space provided by antecedents conditions in a different way.

2.1 Consumer’s choice as planned behaviour

“The theory of planned behaviour is an extension of the theory of reasoned action (…) made necessary by the original model’s limitations in dealing with behaviours over which people have incomplete volitional control”.[20] What seems to be a contradiction to the rational actor model is nothing more than a concession to social psychology, visible in the centre stage claimed by intentions. Intention is nothing different to motivation and it is supplemented by ability (behavioural control). The idea behind Ajzen’s model is that although individuals may have a strong intention to perform a specific behaviour, although their attitudes towards the respective behaviour may be highly favourable and although subjective norms pose no problem in performing the respective behaviour, there may be circumstances beyond individual control that prevent individuals from doing so. In other words: If an actor is willing to make a particular behavioural decision and he is able to show the respective behaviour, he will do so,[21] but there are, however, circumstances that narrow down actor’s ability to do so: “the performance of most [behaviours] depends at least to some degree on such non-motivational factors as availability of requisite opportunities and resources (e.g. time, money, cooperation of others…)”.[22] To model situations over which actors do not have complete control, Ajzen introduces the concept of “perceived behavioural control”. Perceived behavioural control goes beyond actual behavioural control exercised by resources and opportunities available to an actor.[23] Perceived behavioural control circumscribes what Bandura called self-efficacy. Self-efficacy is “concerned with judgements of how well one can execute courses of action required to deal with prospective situations”.[24] This gives the modelling of behaviour a complete new twist, because besides the important role resources, intentions and norms play in the explanation of individual behaviour, a decisive role is taken by self-efficacy the trust in one’s own abilities to achieve what one is wanting to achieve.


[1] Bandura (1977); Skinner (1969)

[2] Allport, (1937), Ajzen (1991); Ajzen & Fishbein (1980);

[3] Personality traits as antecedents for explaining behaviour have gained a lot of prominence in industrial psychology. Traits are deployed to predict behaviour especially in the context of employee selection; Barrick & Mount (2003; 1991)

[4] Lindenberg & Frey (1993); Simon (1955).

[5] Kuhlstrom (1999); McClelland (1985)

[6] Von Neumann & Morgenstern (1944).

[7] Simon (1982); Tversky & Kahneman (1986),

[8] Keynes (1936).

[9] Hayek (2009 [1958]).

[10] Ajzen (1991).

[11] Ajzen & Fishbein (1980).

[12] Engel, Blackwell & Miniard (1990).

[13] In philosophical terms I suggest a deductive model that starts with a general statements fills in the antecedents conditions and derives the conclusion. Or stated differently, I propose a model consisting of an explanans and an explanandum; Hempel (1994). It is important to stress that the explanandum is a singular sentence derived of the explanans which needs to be checked against reality and to be either falsified or confirmed. So what is proposed here is a model that draws of the philosophical legacy of critical rationalism or falsificationalism as developed by Popper (1959).

[14] Simon (1982); Tversky & Kahneman (1986)

[15] Hastie & Dawes (2010), pp.32-40.

[16] Tversky & Kahneman (1974).

[17] Ajzen (1991).

[18] Ajzen & Fishbein (1980).

[19] Engel, Blackwell and Miniard (1990).

[20] Ajzen (1991), p.181.

[21] Ajzen (1991), p.182.

[22] Ajzen (1991), p.182.

[23] Ajzen (1991), p.183.

[24] Bandura (1982), p.122.


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Title: Satisfied investors: Modelling customer satisfactions’ influence on re-investing